M/S ROD RETAIL (P) LTD.

The Applicant is in the business of retail sale of sunglasses. It has several retail outlets in Delhi and one such outlet is at Terminal 3, Indira Gandhi International Airport, New delhi. The outlet is permitted to function beyond the Customs area and within the Security hold area of the IGI Airport. It procures supplies from Sunglass Hut Brand owner M/s Luxottica India Private Limited, Gurgaon after payment of Integrated tax @ 28%. These sunglasses are further supplied by the applicant only to such passengers which have a valid International Boarding pass. The applicant is charging SGST/CGST on supply made to International passengers.

The Applicant sought Advance Ruling on "Whether the supply of sunglasses from the retail outlet at Terminal 3, IGI Airport, New Delhi to outbound international passengers against the international boarding pass is liable to SGST under the DGST Act 2017 and CGST under the CGST Act 2017 or it is a zero rated 'export' supply with in the meaning of section 2(23) r/w section 2(5) of the IGST Act 2017"?

The Applicant submitted that supply of sunglasses to the International passengers is an instance of 'Export of goods' and is a zero rated supply under section 16 of the IGST Act.

As per section 2(5) of the IGST Act 2017, export of goods take place only when goods are taken out to a place outside India. Further as per section 2(56) of CGST Act India means territory of India including its territorial waters and the air space above its territory and territorial waters. Hence the goods can be said to be exported only when they cross the territorial waters of India and cannot be said to be exported merely on crossing the Customs Frontiers of India.

It is held that supply of goods by the applicant to International passengers from retail outlet situated in Security hold area may be taking place beyond Customs frontier of India  as defined under section 2(4) of the IGST Act. However, the outlet is not outside India but is within the territory of India as defined under section 2(56) of CGST Act, hence the applicant is not taking goods out of India and supply cannot be called Export under section  2(5) of the IGST Act or zero rated supply under section 16(1) of the IGST Act.

Crux: Supply of sunglasses from the retail outlet at Terminal 3, IGI Airport, New Delhi to outbound international passengers cannot be called Export or zero rated supply, hence the applicant is required to pay GST at the applicable rates.